Trapped ILS capital news

Higher-risk focused insurance-linked securities (ILS) fund strategies appear to be averaging losses around the 17% mark after hurricane Ian, according to a report from Frontier Advisors.

The apparent impairment of global dedicated reinsurance capital is set to create “generational” opportunities for underwriting companies, according to David Flandro and Michelle To of Howden Broking.

According to sources in the insurance-linked securities (ILS) investment community, side-pockets being established after hurricane Ian by ILS funds that invest in private deals and collateralized contracts, to segregate potentially loss affected investments, are ranging from as small as 3% to as much as 30% of a strategy.

Speaking this morning at a briefing held in advance of the annual Baden-Baden reinsurance meetings in Germany, Thomas Blunck, member of the board of management at Munich Re, explained that trapped ILS capital after hurricane Ian could influence reinsurance renewals across the European region.

The world has a “vibrant wholesale risk market”, spanning insurance, reinsurance and insurance-linked securities (ILS), but it’s time to go back to basics, industry expert speakers explained at Convergence 2022 in Bermuda last week.

Two of Australia’s largest insurers have both slashed their reserve provisions for business interruption claims from the COVID-19 pandemic after last week’s test case ruling.

The second test case in the High Court of Australia regarding the interpretation of policy wordings in business interruption policies after the COVID-19 pandemic, has been resolved in favour of insurers after appeals were denied, a move that has positive implications for the release of some trapped ILS capital, we’re told.

During a panel discussion at the ILS Bermuda Convergence 2022 event yesterday, Michael Millette told the audience that while the quantum of loss matters after hurricane Ian, with such a range of estimates, the risk is that cedents will all seek to trap capital as if the industry impact is going to be $70 billion […]

Insurance-linked securities (ILS) fund managers have been working to free trapped capital related to possible COVID pandemic related losses in European reinsurance contracts, with commutations being pursued, AM Best has reported.

Managers of insurance-linked securities (ILS) funds and other strategies are pushing back on what is seen as still excessive trapping of capital linked to COVID-19 related claims, as confidence rises that the eventual impacts of this will be relatively limited for the ILS market.